An economic moat is a term popularized by Warren Buffett to describe a company's sustainable competitive advantage that protects its market share and profitability from competitors. Just as a moat protects a castle, an economic moat protects a business.
Companies can build moats through various means: brand power (Coca-Cola), network effects (Facebook), cost advantages (Walmart), switching costs (Microsoft), and patents or intellectual property (pharmaceutical companies).
Investors look for companies with wide economic moats because these businesses are more likely to maintain their competitive position and generate consistent profits over time. A strong moat makes it difficult for competitors to erode a company's market share.